FXstreet.com (Barcelona) - The gold market experienced another roller-coast of day, trading as low as 1321 during the Asia session and as high as 1404 during New York trade before closing up 1.03% at 1369.40. The action in recent days has led many analysts to question whether the long term bull trend of gold has been damaged, or if this just a much needed correction before another leg higher begins.

According to Sean Lee at FXWW, “Gold fundamentals haven’t changed; central banks continue to print Fiat currency at breakneck speeds and much of this excess paper will eventually find its way to developing economies in Asia and South America.” He went on to add, “These people have a much different relationship with Gold and the Fiat system than do western economies who’ve been so well served by the latter. Don’t look at the futures market, look instead at what happens in the physical market where Chinese, Indian, Brazilian interests continue to buy in size.”

Looking at the daily chart, price remains below all short term moving averages (9dma & 20dma), and they are also downward sloping which adds to the bearish development. A short term bounce after such a severe sell off is often due to short covering and doesn’t repair the technical damage on longer term time frames. First resistance sits at 1404.2 (high price from April 16th), followed by 1422 (supply candle on 60min chart). Initial support sits at 1360 (support on 1 hr chart), followed by 1330 (bullish engulf candle on 60 min chart). Given the slope of the moving averages on all three time frames (daily, weekly, monthly), it’s hard to argue from a trend following perspective that the path of least resistance isn’t lower.